April 1 (Bloomberg) -- West Texas Intermediate crude fell
the most since March 12 on speculation that U.S. inventories
gained for an 11th week and as a gauge of manufacturing rose
less than expected. Brent slipped.

WTI dropped for a second day. Stockpiles probably climbed
2.5 million barrels last week, according to a Bloomberg survey
before a government report tomorrow. The Institute for Supply
Management’s U.S. manufacturing index was 53.7 in March, lower
than the 54 forecast in a Bloomberg survey. A separate report
showed Chinese manufacturing weakened.

“All the news is bearish today,” said Michael Lynch,
president of Strategic Energy & Economic Research in Winchester,
Massachusetts. “The manufacturing data is not supportive and we
are expecting another build in inventories.”

WTI for May delivery declined $1.84, or 1.8 percent, to
settle at $99.74 a barrel on the New York Mercantile Exchange.
The volume of all futures traded was 4.4 percent below the 100-day average at 4:45 p.m. Prices decreased 1 percent in March.

Prices were little changed from the settlement after the
American Petroleum Institute reported U.S. crude inventories
dropped 5.8 million barrels last week. WTI futures fell $1.99,
or 2 percent, to $99.59 at 4:45 p.m. in electronic trading.
Prices were $99.37 before the report was released at 4:30 p.m.

Brent crude for May settlement slid $2.14, or 2 percent, to
end the session at $105.62 a barrel on the London-based ICE
Futures Europe exchange. Volume was 8.6 percent above the 100-day average. The European benchmark was at a $5.88 premium to
WTI after closing at $6.18 yesterday.

Supply Report

WTI’s losses accelerated after prices moved below the
front-month contract’s 200-day moving average, said John
Kilduff, a partner at Again Capital LLC, a New York-based hedge
fund that focuses on energy.

“We broke the 200-day average and that’s definitely
weighing on things,” he said. “Inventories are going to have
another build tomorrow. The weak data from China set the tone
for the day.”

U.S. crude inventories rose 0.7 percent to 385 million
barrels in the week ended March 28, according to the median of
nine analyst estimates in a Bloomberg survey before the Energy
Information Administration report.

Stockpiles climbed 6.62 million barrels to 382.5 million in
the week ended March 21, the highest level since November, the
EIA, the Energy Department’s statistical arm, said last week.
Inventories along the Gulf of Mexico, known as PADD 3, rose to
200.3 million, the most in EIA data going back to 1990.

Refinery Utilization

“We have a well-supplied market,” said Phil Flynn, senior
market analyst at the Price Futures Group in Chicago.

Refineries operated at 86 percent of their capacity in the
week ended March 21, staying below 90 percent for a 10th week.
They probably rose to 86.4 percent last week, the survey showed.

“I do think that when runs increase, we should start to
see crude inventories drop,” said Tom Finlon, Jupiter, Florida-based director of Energy Analytics Group LLC. “I have every
reason to believe that runs are going to be much closer to 90 in
a few weeks.”

WTI gained last week on speculation that the Ukraine crisis
would disrupt global oil supplies. Futures settled at $101.67 on
March 28, the highest level since March 7. Prices have closed
above $100 since March 26.

The $100 level “is a little too high given the inventories
and the factor that the global economy doesn’t look very
strong,” Lynch said.

Implied volatility for at-the-money WTI options expiring in
May was 18.5 percent, up from 17.8 percent yesterday, data
compiled by Bloomberg showed.